The ability to record transactional data with transparency is the key to enterprise blockchain solutions emerging in accounting.
Accounting activities require accuracy and transparency of transaction data. This strict requirement makes the accounting industry not have any breakthrough changes in the data digitization process. The ability to record transactional data with transparency is the key to enterprise blockchain solutions emerging in accounting. According to the Juniper Research report, by 2030, $27 billion is the amount financial institutions save when applying blockchain technology.
Blockchain in accounting
Since its inception, blockchain technology has received much attention from big companies in finance and accounting. The four leading auditing organizations in the world including PwC, Deloitte, Ernst & Young, and KPMG have all established blockchain research labs and their application in finance and accounting activities so far.
Organizations such as the Australian Government research institute, the Australian Industrial and Scientific Research Organization (CSIRO), and the Australian Stock Exchange (ASX) are also studying blockchain’s applications in the field of accounting.
The original goal of these agencies and organizations is to use blockchain to simplify processes, reduce errors, and cut down costs with additional applications to existing accounting systems. Then, once the adoption and efficiency of blockchain is available, the companies expect more mainstream applications to be adopted.
Enterprise blockchain solutions in the field of accounting
By providing a reliable and transparent ledger, blockchain reduces the costs of maintaining and modifying transactional data. Furthermore, enterprise blockchain solutions promise to free up accountants from mere storage and focus on planning and pricing work.
Automatic payment solution:
Enterprises have many accounts that need to be paid with different durations at different times. Smart contracts can be used to automate payments and create a reliable to-to-job or receivable account systems based on cryptographic algorithms.
An invoice can run automatically after checking that activities of delivering – receiving goods have occurred according to specifications, and there are sufficient funds in the company bank account. This rule not only helps the company reduce time-consuming to collect and physically compare, but also allows the company to make payments on time, ensuring cash flow as planned.
Unified Immutable Ledger Storage Solution:
The high demand for validity and integrity in accounting is a good reason for the variability in the traditional double-entry standard practice. Delays in updating data with this method can lead to system discrepancies.
With the blockchain-baked distributed ledger system solution, the entire business process, spanning many departments or companies, becomes easy to track with just one entry. All transactions from all departments in the whole company will be updated and stored in a single system with integrity and transparency. Even companies, customers, banks, and tax authorities can share, verify, and record information in the same ledger. Employees will not need to spend many hours after work to consolidate and update revenue and expenses into accounting software.
Accordingly, Crystal Stranger – the CEO and founder of El Paso, Texas-based PeaCounts – said the company had built a blockchain-based automated accounting recording and matching system. This solution promises to free employees from the usual tedious and error-prone input operations. This solution also ensures that all data is entered in the most taxable and understandable way.
However, precautionary security measures are necessary when building a new solution as technological risks can be harder to identify than conventional physical paperwork.
Applying new technology will change the workflow. Besides, blockchain technology plays the role of securely storing information, but the accounting system can still be affected if the solution model is not adequately designed. New processes and rules can be put in place to address these risks.
Therefore, accountants not only need to understand accounting operations, but also need to understand more about technology application solutions, but also need to know how the technology works to make the best use of utilities.
The field of accounting is showing more practical applications of enterprise blockchain solutions. This fact indicates an increase in the controlling role of technology solutions for this sector in the future.
Using blockchain and smart contracts, akaChain provides flexible blockchain solutions for businesses. We have successfully applied many solutions in the financial sector, from digital ID solutions to e-KYC and Credit scoring. Accounting is a potential area for the solutions we are building.
Which accounting solution are your companies using? Please tell us your opinion on the application of new technology to finance and accounting operations. We are always ready to share our experiences related to blockchain applications in this field.
akaChain is backed by FPT Software, a globally leading technology, and IT services provider. It is an end-to-end, permissioned, multi-chain network based on the Hyperledger Fabric. Since Establishment in September 2018, akaChain’s product has assisted many enterprises, from SMEs to Fortune 500 firms, to transform with distributed ledger technology. The company provides a broad range of permissioned blockchain-based products and services in multiple sectors, including retail, supply chain, banking and finance, insurance, shopping mall management, etc. to transform with its distributed ledger technology. For more information, please visit https://blog.akachain.io/.
Contact us for more information:
Phone: +84 90 1133883
Addresses: FLC Twin Towers, 265 Cau Giay street, Dich Vong Hau ward, Cau Giay district, Hanoi, Vietnam.